He Earned ₹40 Lakh as His Rightful Profit. His Partner Called It Theft and Filed an FIR. The High Court Called It a Business Dispute and Quashed FIR.
About the Client
A 45-year-old businessman in Gurgaon who ran a small event management company. He had entered into a partnership with another businessman to organize a large corporate event. The total event budget was rupees 2 Crore.
What Was the Case
The event was completed successfully, but a dispute arose over profit-sharing. Our client believed he was entitled to 60% of the profits (as per their verbal agreement), while the partner claimed it was 50-50. The total disputed amount was approximately rupees 40 lakh.
Instead of settling the dispute through negotiation or civil court, the partner went to the police and filed an FIR under Section 420 (cheating) and Section 406 (criminal breach of trust) — alleging that our client had “stolen” rupees 40 lakh from the partnership funds. The FIR was registered at a police station Sector 14, Gurgaon.
Our client received a notice from the police asking him to appear for questioning. He was worried because he had never been involved in any criminal matter before. He came to us the same day.
What Made This Case Difficult
- The FIR was already registered and police had started investigation
- Everything was verbal. There was no written agreement between both
- The partner had submitted bank statements showing rupees 40 lakh transferred to our client’s account, which was actually his rightful profit share
- The police were considering it as a cheating and fraud case, not a business dispute
- Our client was a first-time accused. The stress was affecting his health and business
How SPJ Advocates Handled It
Week 1 — Cooperation With Investigation
- Went to the police station with our client to make sure he was treated fairly during questioning.
- Submitted a detailed written statement explaining the business arrangement, the profit-sharing agreement, and the reason for the rupees 40 lakh transfer
- Provided copies of event contracts, vendor payments, and client receipts proving the partnership and our client’s contribution
Week 2–4 — Preparing the Quashing Petition
- Studied Supreme Court and High Court judgments establishing that business disputes cannot be converted into criminal cases
- The key judgment we relied on was the Supreme Court’s ruling in Indian Oil Corporation vs NEPC India Ltd. — which clearly states that when the substance of a dispute is civil in nature, criminal proceedings cannot be used as a pressure tactic
- Drafted a petition under Section 482 CrPC before the Punjab & Haryana High Court to quash the FIR
- Explained that the entire dispute was about profit-sharing in a business partnership — purely a civil matter, and the FIR was filed only to harass and pressurize our client into giving up his legitimate share
Month 2 — High Court Hearing
- Presented the petition before the High Court with all supporting documents
- Showed that the rupees 40 lakh was a rightful profit transfer, not theft, supported by event contracts and payment records
- Told to the court that no cheating or breach of trust had occurred — both parties had performed their obligations, and the only disagreement was about the profit split
- Showed the court, Supreme Court judgments that clearly say criminal law cannot be used to settle business disputes
Monday Morning — Court Hearing
- The Sessions Judge heard our arguments and reviewed the evidence
- The judge noted that the FIR was filed 4 months after the wife left, and that no medical report was filed for the alleged "pushing down the stairs" incident
- Anticipatory bail was granted to all four family members with conditions: cooperate with investigation, and appear before the IO when summoned
The Result
The Punjab & Haryana High Court quashed the FIR in its entirety. The court observed that the dispute was clearly civil in nature and that criminal proceedings had been initiated as a “pressure tactic” to force a settlement. The court directed the parties to resolve their profit-sharing dispute through civil court or arbitration.
Our client’s criminal record was cleared. He filed a civil suit for his rightful profit share and recovered rupees 40 lakh through a court-mediated settlement within 4 months.
Has someone filed a fake FIR against you to settle a personal or business dispute? Call us at +91-8920245815. We will help you in getting the FIRs quashed through the High Court.
